Half of Working Canadians Living Paycheque to Paycheque, Survey Finds

Number of people living paycheque to paycheque growing every year
September 8, 2016 Updated: September 8, 2016

TORONTO—A new poll suggests that about half of working Canadians would be hard-pressed to meet their financial obligations if their paycheque was delayed for a week.

“What is alarming is the number of employees living paycheque to paycheque is steadily growing year after year,” said Rachel De Grâce, manager of advocacy for the Canadian Payroll Association (CPA).

The CPA’s survey found that 48 percent of respondents said they rely on each payday to cover their bills, with 40 percent admitting they spend an amount equal to all or more of their net pay each week.

A quarter of those polled also said they wouldn’t be able to scrounge up $2,000 if an emergency situation happened within the next month.

The survey highlights the growing number of Canadians unable to put away savings due to mounting debt and a weak economy.

De Grâce said the survey did not cover whether that was because they didn’t have cash or couldn’t tap into available credit. Either way, Canadians are not saving enough, she said.

Many may not be living within their means.

“The best way to live within your means is to direct a portion of your paycheque to a separate bank account. Living within your means requires you to be financially literate,” she said.

That means new employees need to anticipate deductions and not expect their paycheque to equal the hours worked times their wage. For more seasoned employees, that may mean more self restraint.

“With the credit cards, it can be tempting to spend more than is deposited into their bank account,” De Grâce said.

Broader economic trends also play their part. Real wages have not kept up with inflation, said De Grâce, meaning people have to do more with less. More Canadians are working part-time jobs as well. 

The CPA said the survey highlights the growing number of Canadians unable to put away savings due to mounting debt and a weak economy.

Half of those polled said they are able to save five percent or less from their earnings, with 39 percent saying they’re “overwhelmed” by their debt.

The most common type of debt cited by respondents was a mortgage (26 percent), followed by credit-card debt (18 percent), car loans (17 percent), and a line of credit (16 percent).

Of those surveyed, 11 percent believe they’ll never be debt-free, with 22 percent specifying that their credit-card balance is the most difficult debt for them to pay down.

“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy, and are fearful of rising interest rates, inflation, and costs of living,” Patrick Culhane, CPA president and chief executive, said in a release.

Of those surveyed, 36 percent said they don’t expect the economy to ever improve in the town or city they reside in. That number marks a dramatic fall from 66 percent in 2009. 

“We feel that is quite significant,” said De Grâce.

That pessimism is also reflected in the age people expect to retire, which jumped from 60 five years ago to 62 today. 

Half of the survey respondents expect to need a nest egg of at least $1 million, with two-thirds saying they won’t be able to retire until they’re at least 60 years old.

Even with finances being at the forefront for many working Canadians, only 28 percent of those polled said a higher salary is their top priority compared with 48 percent who said they value a better work-life balance and healthy work environment more.

The 40-question survey was conducted online by Framework Partners between June 27 and Aug. 5. There was a total of 5,629 employees who responded from a number of sectors including forestry, manufacturing, government, oil, and retail.

With files from The Canadian Press